paper 2 finance function

Question 1

what is the role of finance function

Answer 1

manage the money a business needs to operate

Question 2

what does finance function do

Answer 2

keeps an eye on finances to cope with problems it may face

Question 3

which type of companies have their own finance function

Answer 3

larger businesses

Question 4

what do sole traders and partners have instead

Answer 4

accountants

Question 5

what forms does finance information take (3)

Answer 5

cost of revenue of business
information on profit and loss
data on average rate of return

Question 6

who supplies the finance information

Answer 6

finance department

Question 7

what business activity does finance influence (3)

Answer 7

expansion
replace equipment
paying expenses

Question 8

if a business can not gain finance what will it result in

Answer 8

business activity is restricted and the business can not grow

Question 9

how can need for finance effect legal form of business (3)

Answer 9

sole trader wanting to expand may ask someone who can provide finance to become a partner - changing the business into a partnership
partnership changes into private ltd
private ltd will become public ltd

Question 10

how does finance function influence business activity

Answer 10

it provides information to departments to make decisions

Question 11

what is sources of finance

Answer 11

where a business gets its money from

Question 12

what is revenue

Answer 12

money business receives from selling goods

Question 13

how is profit or loss calculated

Answer 13

total revenue-total cost of production

Question 14

what is break even analysis

Answer 14

number of products a business needs to sell to cover all of it’s costs

Question 15

what is cash flow record

Answer 15

record of inflow and outflow of money from the business- use to see if they can pay the bills or is finance needed

Question 16

give examples of where business information is useful for decisions (4)

Answer 16

if a business wants to be more environmentally friendly it may need to increase costs - may need additional funds for marketing or to change production

a business maybe effected by recession when sales are reduced the finance department needs to give information on revenue and costs to help know how to respond
a business considering change from job to batch needs information predicting change to revenue costs - how these changes will effect cash flow

business wants to change how it markets products by advertising on tv. Finance department needs to give information about costs and how to raise the finance

Question 17

what jobs are done by finance function (7)

Answer 17

calculate sales revenue
production costs
calculate profit and loss
manage payments
arrange finance
calculate break even
calculate average rate of return